Merck Kgaa

Good morning everyone here in Darmstadt at the Merck Innovation Center and from Darmstadt into the world and a warm welcome to our annual Merck press conference. My name is Axel Wöber, I'm head of communications of Merck and I'm here today with our CEO Belen Garrigo and our CFO Helene von Röder and both will walk you through our results of 2025 and of course talk about our outlook for 2026. So, as always, both Helene and Belen will give some insights first before we dive into our Q&A session a little bit later. And with that, already, I'd like to ask to the stage, Belen Gericho. Belen, the stage is yours.

Thank you, Axel, and good morning, everyone. Thank you for taking part in our full-year press conference, whether you are here in Darmstadt or following us virtually. As Axel mentioned, Helene and I will provide an overview of our business performance for 2025, as well as an outlook for 26. After this, we look forward to your questions. So let me start by summarizing 2025 in a few messages. First of all, we deliver on our financial guidance. Second, our diversified business and regions was a source of strength. And last but not least, we are positioned in major growth areas such as health and AI, and these will be strong platforms for future growth. Before we dive into the numbers, let me reflect on 2025. We recognize that the ongoing crisis, the geopolitical tensions, and rather global challenges have become the new normal. our new reality. The recent developments in the Middle East once again demonstrate how quickly political uncertainties can escalate. This is obviously a very concerning situation, and as you can imagine, the safety of our employees and the safety of our partners in the region is a top priority for us right now. We are in close contact with our teams on the ground and at this moment we see no material impact both at the employee level or in anything that relates to our logistics and distribution. Now, let us deep dive now on 2025. Our achievements are made possible by our more than 62,000 dedicated colleagues globally and our recently expanded executive board team. I want to take this opportunity to extend My heartfelt gratitude to the entire Merck team for their commitment, for their creativity, and for their dedication. Thank you so much, everybody. In 2025, as you know, we strengthened our executive board, welcoming Danny Barsojar, Jan Charles Beard, and Khadija Benhamada to the team. We also announced that Kai Beckman will be my successor as the CEO of Merck. And most recently, Benjamin Hein has been appointed as KAI's successor as the CEO of electronics. Let me now highlight some of our business sectors in 2025. First, in life science, we continued to invest on both capability and capacity. In 2025 we opened our new 100 million facility in Blarne in Ireland and this site produces critical filtration technologies that are used in advanced therapies and is expected to create over 200 jobs by 2028. We are also strengthening our innovation capabilities including in the next generation biology. This is illustrated through the strategic acquisitions that we have announced as half organoids and the JSR chromatography business in life science. Those are excellent examples of how we are reinforcing our portfolio leadership strategy. provide earlier predictive insights into human biology and help researchers identify promising candidates faster and make better informed decisions when it comes to clinical development. And of course this leads to faster clinical progress and hopefully to improve outcomes for complex diseases like cancer as well as genetic disorders. You can see an organoid 3D dome as an exhibit here. Now, in the healthcare sector, we are making strategic moves to strengthen our position in high-growth areas. In July 2025, we completed the acquisition of SpringWorks in the US, establishing rare diseases as a new strategic growth pillar for Merck. In October, we announced an agreement with the White House to increase access to approved IVF therapies. This will strengthen our presence in this highly attractive market while providing affordable access to innovative fertility treatments and to families on their journey to parenthood. You will also see a Pergoveris pen, one of our key IVF treatments in today's exhibit. In December, we received an approval for Pimicotinib in China for treating symptomatic tenosynovial giant cell tumor, which is a rare tumor that affects joints, tendons, or the bursae. This is Pimi. first global approval and a significant step in strengthening our leadership in rare tumors, which will stay a key growth drivers for us. Now let's look at electronics. In 2025, we seized new opportunities for our electronic business and gain benefit from the growing artificial intelligence demand. In August, we also completed the sale of surface solutions, allowing electronics to become a pure-plate business in semiconductor solutions. At the end of 2025, the acquisition of Unity SC already contributed to our organic growth for the first time since we acquired the company. In December, we also inaugurated a 500 million semiconductor solutions mega-site in Taiwan. Therefore, electronics is well positioned to meet the rising demand from artificial intelligence. It is important to note that Merck is involved in 99% of chips that are produced worldwide. We supply materials and chemical solutions for many of the critical steps in chip manufacturing process. In our exhibits today, you can see three different types of transistors that are essential for chip production. To give you an idea of a scale, the Apple M1 Max chip contains approximately 57 billion transistors, all packed into an area about the size of the chip of an index finger. The technologies and services that we offer to the semiconductor industry are one of Merck's key growth drivers. Let me now give you an example of how Merck delivers on future technologies. Because as a science and technology company, we drive innovation by bringing technologies together. A great example is our partnership with IMEC on organ-on-a-chip technology. which combines our expertise in biology with advanced semiconductor chips to simulate human organ functions using living cells. This allows scientists to test medications safely and effectively without using animals, making also drug development faster and even more reliable. You can see this technology Once again, among our exhibits today. All these achievements demonstrate what I said at the beginning, and this is our strategy to drive growth through innovation is working. Our diversified businesses and regions is giving us significant resilience and strength. Our in-region for region approach provides global flexibility while meeting local needs and we are well positioned in major growth areas also for the future and those are semiconductors, rare diseases and advanced therapies. Today Merck stands strong with a clear focus on three growth drivers. Process solutions in life science, rare diseases in healthcare, and semiconductor solutions in electronics. And this is, once again, a strong platform for future growth. Now let's move on to the financial performance of 2025 that Helena will further detail. We have delivered on our guidance spot on. despite a tough 2025 that was marked by significant geopolitical challenges in major markets and, importantly, very strong currency headwinds. Net sales were around stable at 21.1 billion, And throughout the year, strong negative foreign exchange effects weighed on net sales and EBITDA brief. These effects largely resulted from the exchange rate development of several Asian currencies, as well as the U.S. dollar. Overall, the group EBITDA brief was $6.1 billion up, by 5.6% organically. Now, let's look briefly at some of the highlights from Q4 of 2025. In Q4 2025, our group organic sales came in at a solid 2.6% growth. We deliver profitable growth once again supported by all the three sectors, with Group Evita Pre up 3.1 organically. In life science, a strong order intake momentum in process solutions fueled the growth in the business sector. The organic sales growth in healthcare was driven by a strong growth in our CM&E franchise alongside contributions from Mavenclad and from Fertility. Both Mavenclad and Pergoveris achieved double digit growth. Although electronics reported a decline in organic sales due to headwinds from our DS&S business, our semiconductor material business achieved its strongest quarter of the year in Q4. It continued to benefit from strength in artificial intelligence and the advanced nodes markets. Based on this result, we will propose a stable dividend of 2.2 euros during our general meeting, annual general meeting in April 24th. And now let's take a closer look at the numbers for the full year 2025. And it's my pleasure to hand over to Helene who will walk you through our 2025 financial performance. Helene, welcome on the stage.

Thank you very much. And a warm welcome also from my side. So if you look at our net sales in 25, they came in around stable. And our organic sales growth was really dampened by foreign exchange effects of around 4%. Foreign exchange had a significant negative effect across all sectors, mainly driven by the US dollar, as well as Asian currency. Our life science business, if you look at it, grew organically driven by sustained demand from our process solutions customer that drove order momentum. Healthcare delivered solid organic performance despite market pressures. And electronics recovered towards the end of the year thanks to AI driven demand in our semiconductor solutions. Although, full year organic sales were slightly down. EBITDA pre was 6.1 billion euros, which actually corresponded to a margin of 28.9% of net sales. And with that, let's take a look at our business sectors. And I'm starting with life science. Life science has returned to growth, delivering organic sales growth of 4%. And as mentioned earlier, this growth was driven primarily by double-digit organic growth of a process solutions business that saw the market normalize and move beyond the destocking phase finally this year. EBITDA pre rose 3.9% on an organic basis. But due to foreign exchange effects, EBITDA pre remained around stable at 2.6 billion euros. Now, despite a challenging environment, the EBITDA pre-margin remains stable at 28.8%. What we have seen is slightly higher R&D expenses as well as ramp-up costs for recent site expansions which reflect our increased investment in innovation. And this investment is absolutely crucial as it serves as a key driver for future growth and differentiation in the market. Moving on to healthcare. Net sales in this sector climbed 3.7% organically. Foreign exchange effects, however, had a negative impact of 4.1%. Growth was primarily driven by our CM&E franchise, which grew a stellar 7%, as well as strong contributions from a multiple sclerosis treatment, Marvinclad, and fertility treatment, Pergoveris. And as Belen just mentioned, we announced an agreement with the White House in October to enhance access to approved IVF treatment from EMD Sirono. Our complete fertility portfolio has been available since beginning of February 2026 on TrumpRx.gov and the new fertility instant savings website. And of course, in the US we are working towards approval of Pergoveris, a fertility medication already available in 75 countries. All in all, EBITDA pre came in at 3 billion euros for the business, which is up more than 11% organically. Once again, foreign exchange effects partially offset the strong organic growth, And with that, let's look at the electronics sector. Now, electronics experienced a slight organic decline of 0.6%, which was mainly driven by our DSNES business, caused by prolonged delays to large customer projects. Merck expects DSNES to stabilize in 26 and to return to growth in the medium term. But despite this temporary headwind, our semiconductor materials business remained the main growth driver for electronics. It delivered strong high single-digit organic sales growth for the year, thanks to increased demand for high-value materials that enable AI chip systems and advanced nodes. Advanced notes refer to the latest semiconductor manufacturing processes, allowing for smaller feature sizes and the development of the most powerful chips. EBITDA pre was 9% lower, mainly due to one-time adjustments we reported in the second quarter of 25, as you may remember. And with that, let's take a look at our guidance for 26. Before I share the 26 guidance, note that there's three key assumptions underlying this guidance. First, regarding portfolio changes, our forecast reflects the SpringWorks acquisitions as well as the Surface Solutions divestment. And both of those will show portfolio effects in the first half. They will contribute to organic performance in the second half. Second, product scope. This guidance assumes no sales in the US of Mavenclad from March 26 onwards amid generic competition. What it also excludes is the positive effects from a potential US launch of Pergoveris. And third, my favorite topic, currencies. We expect a more volatile foreign exchange environment again in 26. And we assume negative FX effects to continue. Of course, the main drivers are US dollar developments, but we also observe various Asian and emerging market currencies extremely volatile. And with the evolution of currencies, please bear in mind that we expect for Q1 a disproportionate headwind coming from currencies relative to our full year FX guidance. Now, with these three underlying assumptions in mind, we are expecting group net sales of between 20 billion and 21.1 billion, which is based on an organic sales development of minus 1% to 2%. Group EBITDA pre of between 5.5 billion and 6 billion. And with that, let me walk you through the sector breakdown for 26. Starting with life science, our largest business, we confirm mid-single-digit organic sales growth. And that is very much in line with our projections from our Capital Markets Day, which was held in last October. we include in our assumption the continuation of the strong performance in our process solutions business. And across advanced and discovery solutions, we anticipate gradual improvements in biotech funding and academic research stabilization, as well as an evolving market environment in China. With that, moving on to healthcare. There, a challenging year is ahead of us, amid lifecycle challenges for key brands, and that is in particularly Marventlad. On the other hand, we expect growth in the remainder of the portfolio, including CM&E, fertility, and above all, the rare diseases, which will become, as already said earlier, organic in the second half of 26. For electronics, we anticipate continued strong growth in our semiconductor materials business while our DSNES business stabilizes going forward. And with that, I would like to hand it back for Belen for her closing remarks before we take your questions.